New York, Feb 8, 2026, 13:59 EST — Market closed
- Industrials closed sharply higher on Friday, beating the broader market in a late-week rebound.
- Investors are watching delayed U.S. jobs and inflation data this week for clues on rate cuts and growth.
U.S. industrial stocks went into the weekend with a jolt. The Industrials Select Sector SPDR Fund (XLI) ended Friday up 2.8% at $173.18.
The move mattered because it landed in the middle of a messy rotation trade, with investors shifting away from technology after a bruising week. The Dow closed above 50,000 for the first time on Friday, and Caterpillar jumped 7.1% to $726.20, giving the index its biggest boost. “What’s driven it recently has been the broadening that we have seen in the market … across a number of areas, other than just the tech, AI trade,” said Chuck Carlson, chief executive officer at Horizon Investment Services. 1
It was also a clean signal that traders were still willing to buy economically sensitive names after a selloff tied to artificial intelligence fears. The S&P 500 rose 1.97% to 6,932.30 on Friday, with its industrials, staples and energy sectors marking record closes, while the Dow transports index also finished at a record. “The market looks like it was getting a bit overdone to the downside so you’re seeing a rebound in technology and some industrials and financials stocks,” said Robert Pavlik, senior portfolio manager at Dakota Wealth. 2
That rotation is now the setup for Monday. “Rotation is the dominant theme this year,” said Angelo Kourkafas, senior global investment strategist at Edward Jones, pointing to “old-economy sectors and stocks” getting “some love” as tech struggles. A delayed U.S. employment report is due on Wednesday and January’s consumer price index on Friday, after both were pushed back slightly by a recently ended three-day government shutdown. 3
Some investors sound less picky than they did a month ago. “The selloff in the names that carried markets higher may have paused, but we’re instead seeing a wave of aggressive buying of altogether different stocks,” said Tim Murray, capital markets strategy at T. Rowe Price. Citigroup strategist Scott Chronert said money has been moving “into energy stocks, materials companies, staples and industrials,” even while the AI debate dominates headlines. 4
For industrials, the logic is straightforward, if fragile. These companies tend to do better when growth looks steady and borrowing costs stop climbing. Rate-cut expectations and the health of the economy do most of the heavy lifting, and the next read on both is close.
But the same data that could support the trade can also pull it apart. San Francisco Fed President Mary Daly said the U.S. labor market feels “precarious” and that she leans toward additional rate cuts, while stressing inflation is still above the Fed’s 2% goal. The delayed jobs report arrives Wednesday, and economists expect the unemployment rate to hold at 4.4%, a number that could shift the market’s view on how quickly the Fed moves. 5
When trading resumes on Monday, investors will be watching whether industrials can hold onto Friday’s momentum without another leg down in tech. The bigger tests come later: the U.S. jobs report on Wednesday, Feb. 11, and the CPI report on Friday, Feb. 13.
